Reacting primarily to the previous day’s meltdown in energy futures, with a side nod to the general lack of substantive weather-related load outside the northern half of the West and to overflowing storage inventories, the cash market was in massive retreat Thursday. Losses exceeded a dollar across the board, with many points falling more than a dollar and a half.

The largest declines tended to be concentrated in the Gulf Coast and Northeast, while most of the smallest drops were in the Midcontinent/Midwest and West.

Deals were done for flow through the end of October, so the typical weekend slump in industrial demand likely put further downward pressure on prices. Friday’s trading will be for Nov. 1 only.

A Northeast marketer said the screen plunge of nearly 80 cents on Wednesday probably prompted those who had long supply positions to start getting out of them. For all practical purposes “there’s no room left in storage,” he said, and market-area weather looks moderate into early November.

Another marketer acknowledged that prices were starting to come his way, “but this thing [market] is still ridiculously so overpriced,” he said. “Somebody’s making a lot of money out of this, and they probably don’t deserve it.” Upper Midwest temperatures are in the 60s, so nobody should have any heating on, he contended.

PG&E citygates, which had largely stayed firm in the face of several high-linepack OFOs during the last week and a half, succumbed to the overall softness and dropped more than $1.40 as the giant LDC issued another OFO for Friday.

The Energy Information Administration estimated that a meager 26 Bcf was injected into storage for the week ending Oct. 22. Although the volume was toward the lower end of prior expectations, a small build had already been factored into market psychology and thus it was expected to have little or no impact. The injection left storage levels just 5 Bcf shy of the record 3,254 Bcf recorded in late November 2001.

Expect prices to keep going lower Friday, said one source who cited Thursday’s 9.1-cent drop in the December futures contract on its debut as prompt month and continued moderate weather forecasts in most market areas. But he sees the storage situation as the chief factor in the continued softness that he anticipates next week. In many cases traders quite literally no longer have storage as a viable alternative home for gas that cannot be used for immediate burns. Also, he said, some storage operators may have to restrict injection services because of the significant extra compression required for stashing more gas in a facility that is very close to full already.

However, the West stands the best chance of resisting further price slides. A stormy cold front will persist through the weekend in northern sections and be followed by another one early next week, according to The Weather Channel.

Minerals Management Service reported further progress in the restoration of shut-in Gulf of Mexico production. Shut-ins fell to 1,227.08 MMcf/d Thursday, 87 MMcf/d less than on Wednesday, the agency said. Its cumulative tally of deferred production since Sept. 11 105.757 Bcf, or 2.377% of annual Gulf output.

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